Vanguard Small Cap Growth Index Fund

Scorecard
4 / 5 Stars
Lipper
5 5 2 5 5
Zacks Investment Research
2 (Buy)
Standard & Poor's
3 / 5 Stars
TheStreet.com
B+ (Buy)

#20 in Small Growth

U.S. News evaluated 215 Small Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 33.84 percent over the past year, 15.66 percent over the past three years, 29.87 percent over the past five years, and 10.47 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 3.9%
1 Year 33.8%
3 Years (Annualized) 15.7%
5 Years (Annualized) 29.9%
10 Years (Annualized) 10.5%

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Summary

The Vanguard Small Capitalization Growth Index Fund is a plain-vanilla way to invest in shares of small companies.

As of March 05, 2014, the fund has assets totaling almost $16.04 billion invested in 683 different holdings. Its portfolio consists of shares of small-cap companies. 

This passively managed fund looks to replicate the performance of the MSCI U.S. Small Cap Growth Index. As such, in recent years it's been a classic example of the traditional small-cap story. In 2008, the fund got hammered and lost 40 percent. But small caps tend to jump to the front of the pack during rebounds, and last year the fund gained 42 percent. The fund holds roughly 1,000 stocks, and true to Vanguard's reputation as a leader in the indexing universe, it's done a good job of mirroring the returns of its benchmark. The fund has returned 33.84 percent over the past year and 15.66 percent over the past three years.

Historically, the fund has made a good case for the use of indexing. Since 2000, the fund has landed in the top half of Morningstar's small-growth category in every year except one. Its low expense ratio has been a major contributor to this outperformance. As of the end of the second quarter of 2010, the fund's returns for the trailing 10-year period beat those of 86 percent of its peers. Over that same time period, it's worth noting that small caps outperformed the broader market. The fund has returned 29.87 percent over the past five years and 10.47 percent over the past decade.

Investment Strategy

The fund invests in roughly 1,000 companies. Its goal is to mirror, through passive management, the performance of the MSCI U.S. Small Cap Growth Index.

Role in Portfolio

Morningstar calls this fund a "supporting player."

Management

Gerard O'Reilly was named lead manager in May 2005 after previous manager Gus Sauter stepped down.

Fees

Vanguard Small Cap Growth Index Fund has an expense ratio of 0.24 percent.

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Risk

Like all stock funds, this one comes with some risks. Additionally, small-cap stocks can be more volatile than the broader market. 

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